Final COOL Rule Will Increase Cost Burdens on Independent Grocers

The National Grocers Association (NGA) expressed its strong frustration over a rule change, effective immediately, that the United States Department of Agriculture (USDA) finalized today revising mandatory Country of Origin Labeling (COOL). The rule, “Mandatory Country of Origin Labeling of Beef, Pork, Lamb, Chicken, Goat Meat, Wild and Farm-Raised Shell Fish, Perishable Agricultural Commodities, Peanuts, Pecans, Ginseng and Macadamia Nuts”, orders a major overhaul of the current labeling requirements which were only released in March 2009 and have cost the grocery industry billions of dollars in labeling and recordkeeping expenses over the past four years.

Today’s rule follows a recent World Trade Organization (WTO) ruling, and drastically expands the current COOL regulations for the country of origin label to include each production step for muscle cuts of beef, pork, lamb and chicken and eliminates any allowed commingling of muscle cuts of covered commodities of different  origins. As one example, the rule nearly doubles the amount of text grocers must put on COOL labels from the current “Product of the U.S.” and changes it to “Born, Raised, and Slaughtered in the U.S.”

“This action by the USDA is just another example of the unnecessary and growing regulatory excess that will burden not only retailers and processors, but the entire industry,” said Peter J. Larkin, President & CEO, NGA. “Even though we are given a six month educational period by USDA, the industry is being forced to immediately sustain regulatory expenses that are likely to once again be ruled discriminatory by the WTO.”

Independent retail grocers are known for their service meat departments that have on-premise butchers who provide value, variety, and service. This rule is discriminatory, and will limit the capacity of service meat departments as well as the variety of product they offer their customers.

“It has long been clear that COOL labeling has been a costly regulation that is not required as a public health and safety measure,” continued Larkin. “The costs of this new change will far exceed the benefits intended and will result in no meaningful consumer benefits.  Congress must take action now and create a legislative fix.”

While the USDA estimates the cost unrealistically low at $32 million, NGA believes the new regulation is likely to exceed $100 million on the industry for new and bigger labels, new machines, and signage that could change daily. Aside from impacting grocers’ bottom line, the final rule will cause market and supply dislocations, adversely affect jobs, business operations, and international trade. Countries like Canada and Mexico are likely to challenge the rule, making any adoption and implementation precipitous and cause unnecessary economic harm to the food industry through expenses for a regulation that is likely to be found in violation of WTO trade agreements. NGA strongly urged that USDA delay the effective date of the final rule until WTO considered its next challenge.

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